Overview

• JPMorgan recorded a $170 million charge-off tied to wholesale lending to subprime auto lender Tricolor, with CEO Jamie Dimon calling it “not our finest moment” and ordering a review of controls.
• Dimon cautioned that the collapses could be early signs of broader excess after a long credit bull market, adding that more credit issues could surface in a downturn.
• BlackRock CFO Martin Small said borrower credit quality is generally strong and characterized the Tricolor and First Brands cases as idiosyncratic, including areas with potential fraud, rather than evidence of widespread stress.
• Banks and creditors disclosed varying exposures, with Fifth Third guiding to a $170 million to $200 million Tricolor loss, UBS and Jefferies linked to First Brands, and Citi, Goldman Sachs, and JPMorgan saying they have no First Brands exposure.
• Legal scrutiny is intensifying, as a bankruptcy trustee’s lawyer alleged pervasive fraud at Tricolor and a First Brands creditor claimed up to $2.3 billion is missing, with the U.S. Department of Justice probing First Brands.